The two tiger economies will benefit greatly from collaboration – it will also bring them better social prosperity.

Taiwan and Hong Kong are closely connected to each other, culturally and commercially. Both take pride in inheriting the best ancient Chinese cultural practices, from drinking Oolong tea and practicing martial arts, to respecting elders. Commercially, more than 400 flights go between Taiwan and Hong Kong on a weekly basis, making the route one of the top 10 "busiest commercial airline routes" in the world in 2011. After the 2008 world financial crisis, both economies started to search for a new model of development, a model integrating innovation with broader social needs.

The World Economic Forum (WEF) categorises both Taiwan and Hong Kong as economies that have reached the state of "innovation-driven growth", the third stage of economic development. (Stage 1 of development is "factor-driven development", and State 2 is "efficiency-driven development"). Hong Kong ranked No9 in WEF's Global Competitive Index with a score of 5.4, while Taiwan ranked No 13 with a score of 5.3. And yet, 9.2% of businesses in Taiwan and 16.2% in Hong Kong selected "insufficient capacity to innovate" as one of the top five problems in doing businesses.

Despite both economies' highly-developed social welfare systems, they both have room for improvement in addressing issues of social inclusion and economic access. In the past few years, organisations have hosted social entrepreneurship conferences and speaker series, creating platforms for knowledge sharing and discussions, and organising field visits for cross-learning. Social innovators there have also realised that they are facing similar issues – the lack of communication between grass-root organisations and governmental agencies, difficulties in aligning social and business visions, and shortages of socially-minded business practitioners.

What could Taiwan and Hong Kong do to increase collaboration to become Asia's top social innovation hubs?

Co-learning for knowledge accumulation

Despite their similarities, Taiwan and Hong Kong walked different paths in the past century. Taiwan was colonised by Japan for 50 years before starting its own developmental path. Hong Kong, on the other hand, was ruled by the British for over 100 years. This historical difference shaped the model of social innovation: Hong Kong developed a model with strong British influence, while Taiwan learned many of its lessons from Japan. What's interesting is that Great Britain and Japan are both pioneers in the field of social innovation. By learning from each other, Hong Kong and Taiwan could blend best practices from the east and west, accumulating a wealth of knowledge on social innovation. To achieve this, the two regions should open up their respective social co-working spaces by hosting each other's social innovators and collaborating on social projects to effectively foster knowledge exchange and absorb each other's strengths.

Co-operate to expand and grow

Neither Taiwan (23.2 million) nor Hong Kong (7.4 million) has a large population. This has been one of the major barriers for social enterprises in both places to achieve scale. Based on the law of comparative advantage, social enterprises on both sides could explore opportunities to sell products in each other's market, effectively creating a larger market. For example, Taiwan is known for producing high-quality agricultural products, while Hong Kong essentially does not have an agriculture sector. Hence, it is possible for a Taiwanese agricultural social enterprise to sell its products to a Hong Kong food distribution social enterprise. This effectively increases the Taiwanese social enterprise's potential market share by a third. Moreover, social enterprises can also co-operate in production and marketing. For instance, a medical screening device can be produced by a social enterprise in Taiwan, sold by a different social enterprise in Hong Kong, to elders with chronic medical conditions in Taiwan, Hong Kong, mainland China and even other Asean economies.

Cross-investing to diversify portfolio

Venture philanthropy and social investing are more developed in Hong Kong than in Taiwan, not surprising given that Hong Kong has one of the most efficient financial services sectors in the world and ranks No 1 in financial market development (Taiwan ranks No 19). Though Taiwanese society is very generous when it comes to charitable donation, the idea of investing in social-purpose businesses is still novel. If social investors in Hong Kong can start looking into investment opportunities in Taiwan, it would not only help them diversify their investment portfolio, but also give Taiwanese social entrepreneurs a new source of funding.

Although still small in size and under-studied, the social innovation sectors in Taiwan and Hong Kong are booming. With collaborative efforts from both sides, Taiwan and Hong Kong will be on their way to becoming Asia's leading social innovation hubs.